How the Trump Presidency Will Impact the Energy Industry
Image courtesy of Matt Johnson under Attribution 2.0 Generic Deed, resized to 700 x 391 pixels.
The second Trump presidency will likely have a dramatic impact on multiple facets of the U.S. energy industry. A recent article from Forbes read the proverbial tea leaves to predict what the future holds. Let’s dive in!
Industry Implications of the New Trump Presidency
Some of what the Forbes article came up with is predictable, but a couple items were a bit more surprising. What follows is a summary of what I believe are the 3 key points from the Forbes analysis.
First, aside from coal, a reinvigorated focus on fossil fuels is expected under Trump. This might take the form of relaxing the enforcement of certain environmental regulations, introducing new subsidies, or streamlining permitting processes. Generally speaking, this one is not surprising. Although renewable energy gets a lot of press, the reality is that U.S. fossil fuel production has increased over the last 4 years. This has been a longstanding trend that is unlikely to change under Trump.
Second, it’s not just fossil fuels that will experience a reinvigoration – investment in renewable energy will likely increase as well. This will be necessary to help accommodate future demand increases from data centers and other digital infrastructure. The energy incentives in the Inflation Reduction Act (IRA), are expected to remain in place for wind, solar, gas and even nuclear energy sources.
Third, there could be changes to federal fiscal or monetary policy under the new Trump presidency, which could make investing in energy infrastructure less financially attractive. The federal deficit could increase if federal tax revenues are reduced, pressuring politicians to reduce energy investment tax credits. Also, if additional tariffs are imposed, inflation as well as the cost of long-term debt could increase, making energy projects more expensive. The net effect would be a dampening of much-needed infrastructure investment.
In summary, it’s reasonable to expect that the next Trump presidency will have an impact on the energy industry. It will certainly be interesting to see how it all plays out!
